Corporate Governance in Brazil and Opportunistic Behavior in the Use of Insider Information

Losses resulting from the opportunistic use of insider information are detrimental, and therefore it is essential to mitigate this behavior through robust corporate governance practices. This research analyzes the determinants of corporate governance that reduce the signs of opportunistic insider trading, considering the assumptions of information asymmetry and opportunistic behavior. The hypotheses formulated consider that compa-nies listed on the Novo Mercado or Level 2 of Corporate Governance, with independent Boards of Directors and greater female representation, active Fiscal Councils, consolidated ESG practices, non-family firms, robust Audit Committees, and audits not linked to the Big Four, tend to show a lower propensity for opportunistic conduct. 237 firms were analyzed, representing 51% of the firms listed on the [B]3 between 2010 and 2021, with 2,175 obser-vations. The panel data analysis confirmed the proposed hypotheses. Therefore, the theo-retical conclusion is that the greater the level of corporate governance practices, the lower the incidence of opportunistic insider trading in the Brazilian capital market. This work contributes to the literature by highlighting the unique characteristics of the largest stock market in Latin America and emphasizing the importance of transparency, formal moni-toring, and informal mechanisms, such as social and reputational pressure on insiders, in-fluencing ethical behavior, and restricting the misuse of privileged information.